Women have made enormous contributions to the country’s economy. In fact, according to Womenable, the U.S. is home to over 11.3 million female-owned businesses which employed around nine million people and generated over $1.9 trillion in 2016. Over the last nine years, the number of female-owned businesses has grown five times faster than the national average.
Regardless of these impressive achievements, women entrepreneurs still face unique challenges in today’s business environment. Setting up shop in locations which are most receptive to female entrepreneurs can help. To help you identify these states, we compiled data from sources such as the United States Census Bureau, Womenable, and the American Express. We then analyzed the data for each state to put together a definitive ranking of the best states for female entrepreneurs.
To rank each state, we chose six categories that significantly influence a state’s desirability for female business owners:
- Percentage of women-owned firms out of total businesses in a state
- Percentage of a state’s business revenues coming from women-owned firms
- Women economic clout in each state
- Trend in net number of women-owned firms per day
- Percentage of women-owned firms with paid employees
- Percentage of employees in the state that are working in women-owned firms
Read on to see which states made the top 10. We also list our definitive ranking of all 50 states below.
The Peach State is the best state for women entrepreneurs after ranking in the top five in three categories. Georgia leads all states in the percentage of women-owned firms category as women businesses account for over 40 percent of the state’s total businesses. Moreover, 20.5 percent of businesses with employees in the state are owned by women to propel the state to number five in this category. In Georgia, there are 54 net new businesses per day that are owned by women, taking fifth place in this metric.
The Sunshine State lands at number two after posting top five finishes in four categories. In Florida, there are 119 net new businesses that are owned by women every day to come in second in this category. In addition, women own 38.5 percent of the businesses in the state, taking the fourth spot in this metric. Also, Florida grabbed the fourth spot for the percentage of women-owned firms with paid employees as women own 20.8 percent of businesses in the state with paid employees.
Completing our podium finishers is the Old Line State as it garnered top 10 rankings in four metrics. It came at number two in the percentage of women-owned firms category as female entrepreneurs account for 39.3 percent of businesses in the state. Women-owned businesses in Maryland contributed 5.69 percent to the total revenues of businesses in the state to come in at number 4 in this metric. In addition, women entrepreneurs employ 8.71 percent of the state’s total number of employees, ranking sixth in this category.
The Golden State comes in at number four with good performances across the board. In California, there are 129 net new businesses owned by women daily to lead all states. Moreover, women-owned businesses represent 37.2 percent of all businesses in the state, placing seventh in this category. Lastly, firms owned by women generated 5.15 percent of total business revenue in the state to rank eighth in this metric.
Concluding the first half of our list is the Centennial State, managing to rank within the top 15 in five categories. The state took second place honors for the percentage of women-owned firms with paid employees–21.52 percent of businesses with paid employees in Colorado are owned by women. Also, the state took the eleventh spot in the economic clout category. In addition, businesses owned by women account for 4.95 percent of revenues of all businesses in the state, finishing 11th in this category.
Kicking off the second half of our list is the Old Dominion State with top 15 finishes in three categories. 20.89 percent of businesses with paid employees in the state are owned by women to grab the third spot in this category. In Virginia, 8.38 percent of employees are employed by female entrepreneurs, placing 10th in this metric. Also, there are 17 net new women-owned businesses in the state per day, coming in at 15th place.
7. New York
The Empire State grabs the seventh spot, buoyed by top 20 rankings in all categories. In New York, there are 57 net new women-owned firms per day to rank number four in this category. In addition, women-owned firms account for 4.81 percent of the total revenues generated by all businesses in the state, coming in at number 14. Lastly, the state ranks 17th in the percentage of women-owned firms category as 36.12 percent of businesses in New York are owned by women.
Texas is the eighth best state for female entrepreneurs after ranking within the top 15 in three categories just like Virginia. The Lone Star State dominates the economic clout metric, ranking number 1 in this category. In addition, there are 166 net new businesses owned by women per day in Texas to rank third. Also, 19.45 percent of businesses in Texas with paid employees are owned by women, placing 13th in this metric.
Hawaii takes the ninth spot in the ranking, bolstered by top 10 finishes in three categories. In the Aloha State, 6.94 percent of all business revenues are generated by female-owned firms to rank second in this category. Moreover, women-owned firms represent 37.53 percent of all businesses in the state, coming in at number six. In addition, businesses owned by females employ 8.56 percent of all employees in Hawaii, ranking eighth in this category.
10. New Mexico
Capping off our top ten rankings is New Mexico as the state posted good performances in four categories. In the Land of Enchantment, women-owned firms account for 39.01 percent of all businesses to take the third spot in the category. It also ranks third in another category as 9.35 percent of employees in New Mexico are employed by female entrepreneurs. Lastly, 5.33 percent of all business revenues in the state are produced by women-owned businesses to rank seventh in this metric.
We based the ranking of the best states for women entrepreneurs based on six metrics. We then analyzed the data and assigned the following weights for each category based on the category’s importance:
1. Percentage of Women-Owned Businesses in the State – 20 percent
This metric shows the percentage of total businesses in each state that are owned by women. We assigned this metric highest weight because states which already have a high percentage of women-owned businesses will be welcoming and receptive to other women who want to follow the same lead. For this category, we collected data on the number of female-owned firms by state, divided it by the total number of firms in the state, and multiplied the quotient by 100 to get the percentage.
2. Percentage of State Business Revenues from Women-Owned Firms – 20 percent
This category shows the percentage of total business revenues in each state that come from businesses owned by women. This metric was also given the highest weight because it quantifies the contribution of women-owned businesses to the state’s economy. We gathered data on total revenues generated by female-owned businesses, divided it by the total revenues generated by all firms in the state, and multiplied the quotient by 100 to get the percentage.
3. Economic Clout Rank – 17.5 percent
The Economic Clout Rank, put together by Womenable and American Express OPEN, is the overall ranking of the state when taking into account the number, revenue, and employment growth of female-owned businesses from 2007 to 2016. The Rank can be viewed as an index that illustrates the influence of female-owned businesses in the state’s economy. Although the ranking is comprehensive, the metric did not the receive the highest weight because the source extrapolated data for 2013 – 2016 as actual numbers for those years are currently unavailable.
4. Trend in Net Number of New Women-Owned Firms Per Day – 17.5 percent
This metric considers the total number of new women-owned businesses opened each day (tracked through business filings and registrations) minus daily closures in those businesses or changes in ownership that results in a firm losing its female-owned status. Just like Economic Clout Rank, the metric did not the receive a higher weight because the source extrapolated data for 2013 – 2016 as actual numbers for those years are currently unavailable.
5. Percentage of Women-Owned Firms With Paid Employees – 12.5 percent
Having paid employees shows that there is demand for a business to the point that the owner has to expand and hire. States with a high percentage of female-owned firms that have paid employees indicate a friendly business environment for women. To get the percentage, we gathered data on the total number of firms owned by females with paid employees, divided it by the total number of firms with paid employees, and multiplied the quotient by 100.
We assigned the lowest weight to this metric because the number of employees can be a success indicator, but it is not the only one. Sole proprietors can have a very successful business. They can limit the number of their employees or choose not to have employees at all and rely on contractors or vendors to get things done.
6. Percentage of Employees In Women-Owned Firms – 12.5 percent
To some extent, the success of a company can be measured by the number of its employees. States with a high percentage of employees working for firms owned by women points to the success of female entrepreneurs. We collected data on the total number of employees of female-owned firms, divided it by the total number of employees of all firms, and multiplied the quotient by 100 to get the percentage.
For the reasons mentioned above, we assigned the lowest weight to this metric because the number of employees can be a success indicator, but it is not the only one.
Best States for Women Entrepreneurs – 50 State Ranking
|7. New York|
|10. New Mexico|
|11. North Carolina|
|21. South Carolina|
|30. New Jersey|
|34. Rhode Island|
|35. South Dakota|
|39. West Virginia|
|40. North Dakota|
|47. New Hampshire|
Percentage of Women-Owned Businesses in the State
We relied on data provided by the United States Census Bureau. Census.gov releases the Survey of Business Owners every five years. We used 2012 data which was the latest available. For this metric, states with higher percentages received higher rankings.
Percentage of State Business Revenues from Women-Owned Firms
For this category, we also sourced data from the Census Bureau’s Survey of Business Owners. We also used the 2012 version of the survey which provides the most recent available data. States with higher revenue percentages got higher rankings
Economic Clout Rank
For this category, we used data from The State of Women-Owned Businesses in the U.S.:2016 provided by the Womenable and American Express OPEN. The study focused on the trends that took place between 2007 – 2016. Womenable and American Express OPEN relied on the most recent Census data (2012) and extrapolated data for 2013 – 2016.
Trend in Net Number of New Women-Owned Firms per Day
For this metric, we relied on data from The State of Women-Owned Businesses in the US: 2016 provided by the Womenable and American Express Open for this metric. For our analysis, we looked at the trend from 2007 – 2016. States with a higher net number of new female-owned firms per day received higher rankings. Womenable and American Express OPEN relied on Census data (2012) and extrapolated data for 2013 – 2016.
Percentage of Women-Owned Firms With Paid Employees
For this category, we sourced the latest data provided by the Census Bureau’s Survey of Business Owners. States that had higher percentage of female-owned firms with paid employees were ranked higher.
Percentage of Employees in Women-Owned Firms
The Census Bureau’s Survey of Business Owners 2012 provided the data for this metric. States with a higher percentage of employees in female-owned businesses received higher rankings.
Bottom Line: Best States for Women Entrepreneurs
The best states for female entrepreneurs are scattered throughout the country, which we take as a good sign for the future of women-led businesses. And interestingly, states that typically have economic and fiscal problems, such as New York and California, were in the top 10 here.
What are your thoughts about the results of our research on the best states for women entrepreneurs? Feel free to share your comments below.